The annual Cost V.S Value report for home additions and remodeling projects has been released by Realtor Magazine for 2008. If you are thinking of adding an addition or renovating your home in Massachusetts this is an excellent guide that will at least give you a ballpark on what you can expect for a return on your investment.

"NATIONAL ASSOCIATION OF REALTORS® statistics show that home prices have fallen by an average of 7 percent nationally in the past year. But the value of home owners’ investment in remodeling projects has declined only 3.86 percent on average between 2007 and 2008, according to Remodeling’s 2008–2009 Cost vs. Value Report."

Remodeling produces the Cost vs. Value Report each year in cooperation with REALTOR® magazine. REALTORS® responding to a survey in midsummer said home owners could expect to recoup a national average of 67.3 percent of their investment in 30 different home improvement projects. At the height of the housing boom in 2005, home owners could expect to recoup a national average of 86.7 percent on projects.

Top 10 Project Paybacks

Once again, exterior remodeling projects lead the way for recovery on dollars spent in this year’s Cost vs. Value survey. When you compare the national averages, replacement projects that boost curb appeal—siding, windows, and decks—give you the greatest chance of recouping your money. Inside, only kitchen remodels can compare, at least on a national level.

1.Upscale fiber cement siding (86.7%)

2.Midrange wood deck (81.8%)

3.Midrange vinyl siding (80.7%)

4.Upscale foam-backed vinyl (80.4%)

5.Midrange minor kitchen remodel (79.5%)

6.Upscale vinyl window replacement (79.2%)

7.Midrange wood window replacement (77.7%)

8.Midrange vinyl window replacement (77.2%)

9.Upscale wood window replacement (76.5%)

10. Midrange major kitchen remodel (76.0%)

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Over the many years that I have been selling homes in the Metrowest Massachusetts area it has struck me how often homeowners believe there is a 100% payback on the money they spend on their homes.

Some of the most common things I hear are " how can my home only be worth X when I just spent $60,000 on my new basement" or " I just added this swimming pool for $45,000 my home has to be worth more."

It is quite common for folks to put there list of improvements together add it all up and expect that they can add that onto the value of their home. Many fail to recognize that it is very rare to get a one to one return on the dollar. The items mentioned in the Realtor Magazine report are the best improvements you can make dollar for dollar and none of them come close to a 100% return.

There are other improvements that I know from experience return very little money to a home seller. For example, if you are unfortunate enough to find yourself in a position where you have to replace your Title V Septic system in Massachusetts, you know you will be outlaying a hefty sum of money for a new one.

The typical septic system replacement can run anywhere from $10,000 to $50,000 or more! Well guess what you can be darn sure that if that happens, you will not be getting a buyer to pay you back for putting it in. Buyers just don't care...they expect the toilets to flush. You will be lucky is you get a buyer to give you 10% to 20% of the cost.

In fact this is one of the reasons I always tell my clients to get their Title V Septic inspection done early. A surprise like this is never fun!

Other projects like repaving the driveway or adding additional landscape usually do not offer a high return unless the prior condition was absolutely terrible and the homes price point really warrants it.

Sometimes making home improvements are more about your own personal enjoyment and use and not so much what you will recoup when it comes time to sell you home.

There are plenty of buyers that will appreciate the improvements you have made if they are tasteful and fit what the general population is looking for. In fact when you are faced with a challenging Real Estate market, the homes that get punished the most are the ones that are in less than great shape. Home buyers today have too many options and don't have to settle.

When selling your home sometimes even though you do not get a direct monetary benefit from an improvement you increase the saleability of your home which in the long run causes it to sell quicker. We all know that time equals money:)

The above information on the best remodeling projects cost v.s. value for your home was provided by Bill Gassett, the team leader for the #4 RE/MAX Team in Massachusetts in 2007. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 22+ Years. Bill's office is conveniently located in the center of Hopkinton MA at 77 Main Street.

I have a passion for Real Estate and love to share my marketing expertise! I would welcome the opportunity to earn your business.

Bill-- "Buyers just don't care...they expect the toilets to flush." Great line. I actually did have to point this out to some sellers recently but managed to put it slightly differently, something to the effect: buyers expect to have a functioning waste disposal system or the property wouldn't be saleable at all.

Posted by Kathleen Buckley (STAR REALTY Hopkinton) over 9 years ago

Yvette - Thanks. I think the cost v.s value report is one of the better statistical analysis that Realtor Magazine puts out.

Kathleen - The point is that people assume that a buyer will be willing to assume the cost of this improvement. If you took two homes that were nearly identical and one had a new $50,000 septic system...what would a buyer give a seller for this...not much. It is a hard pill to swallow but it's the truth.

Excellent post and i have bookmarked it. many people here in Austin are actually foregoing selling in lieu of remodeling and selling at a later date. Not the best for us but better for everyone down the line!

Norma - Good point. There are of course things that you can do to your home that may have better returns in one part of the country and not another. I am sure that a swimming pool is a better investment in Florida than it is in Massachusetts.

Bill~Another great post. You have a skill for projecting relevant data in a readable format that Buyers and Sellers can easily understand. Keep up the great posts. I enjoy reading them & know others must as well!

Bill--I do an update on this report every year. It is a wonderful report and few people realize that not every project is 100% return. In fact, even the best projects only yield 70-80% return on investment. Not something most sellers want to hear or believe.

Teri - It seems homes sellers incorrectly make this assumption about investing in improvements for their homes quite often. I would say that it ranks up at the top of the list of incorrect Real Estate judgements.

Your clients want flushing toilets? Picky, picky, picky :) Seriously, it's important for sellers to keep in mind not only what the return may be on their improvements, but also what is the "norm" for the neighborhood. If everyone else has granite countertops, yours are not worth anything extra!

Posted by Lisa Heindel, New Orleans Real Estate Broker (Crescent City Living LLC) over 9 years ago

Lisa excellent example as far as granite counters goes. It can work the other way as well though. If everyone else has granite and you don't then the market will take that into account.

Hi Bill - I'm sending my sellers to your post. Well done recap of the cost vs value issue. But boy you have some very expensive septic systems up your way! They must be pretty fancy to carry a price tag of $10-$50k????

Lee & Pam - Thanks for commenting on the cost v.s value report. Septice systems are very expensive up here in Massachusetts due to our difficult ground conditions (rock, ledge, ect) as well as tough regulations.

Bill - What a wealth of valuable information. This one gets a bookmark!

Posted by Tom Plant (WINEormous.com) over 9 years ago

Bill -- I love your attitude and I wish more agents educated their sellers. Unfortunately that is not the case. Many sellers and their agents expect the buyer to "accept" and 30+ year septic if it is not in total failure. Unfortunately, we don't have title V and never will -- it is NH after all!

Joan - Your right there are so many Realtors that just tell a seller what they want to hear because they fear they will not get the listing otherwise. I have never taken that tactic and never will. You get the straight and narrow from me. I see myself as an advisor and hopefully someone that people see as trustworthy.

Hi Bill- I recently saw this report and thought about doing a post...seems you beat me to it....hmmmm, maybe I should just do a re-blog :-) Not now though, have to leave in a few minutes. Thanks for stopping by my points post, would you mind if I tapped you for more information to share with the others? I'll check back with you tomorrow. Thanks and have a terrific Friday evening.

Posted by Gail MacMillan over 9 years ago

Bill,

Extremely valuable information for homeowners. You should cross purpose this content to a newsletter, I think it would make great newsletter content to your database.

Thanks Bill- I did an update on the post to include suggestions up to now. I mentioned that you were really good in this area and perhaps you would stop back in and explain in a little more detail. Pat Kennedy suggested linking to domain names (I asked her for clarification on that) and also wondering about single property sites. Any help you can give those interested would be awesome. Thanks ~ you're a peach :-)

Posted by Gail MacMillan over 9 years ago

Great post Bill! I had a client yesterday asking me about the Fiber Cement Siding. It's good to know.

This is such an educational breakdown of what can really add (or not!) value to a home...people are always asking...and I never know much more to say other than saying kitchens and baths always seem to count for a lot... Thanks for this comprehensive instruction!

I always like putting the money into the kitchen, no matter what buyers check that out first and foremost. I will be doing a kitchen remodel to my house in a few years and that will be money well spent.

You really need very seuosrily think about working on developing this weblog into a primary authority in this kind of market place. You undoubtedly have a knowledge of the information everyone is browsing for on this blog site anyway and you can definitely even earn a dollar or two off of some advertisements. I would explore following recent topics and raising the amount of articles you place up and I assure you’d begin seeing some amazing customers in the near future. Just a thought, good luck in whatever you do!